Pound performed excellently on Monday, trading upwards all throughout the day. As a result, it broke the level of 170 again, which indicates that the market is picking up. The question now is whether pound can overcome recent highs, especially against yen.
Currently, the Japanese yen is suffering at the hands of the Bank of Japan, which continues to control the yield curve. Interest rates on 10-year JGBs have been held at 50 basis points, so the bank prints more yen, naturally filling the market with supply. This makes makes yen have a hard time maintaining its value, so over the past year, it has fallen against almost all other currencies.
Pound, on the other hand, is strengthening thanks to the Bank of England. As long as the UK is dealing with inflation, the bank is likely to continue its strict monetary policy. Bank of England chief economist Huw Pill even said that secondary inflationary effects could lead to inflation, so the tight monetary policy may last for a longer time.
These conditions point to the likely continued growth of GBP/JPY.
